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Debswana introduces online procurement system

Botswana’s second largest  private sector employer and world‘s leading rough diamonds producer Debswana Diamond Company has begun a process to migrate from manual paper based  procurement  process  to digitised online procurement  system for its suppliers , a press release from the company states.

According to the statement from the 50-50 Botswana-De Beers joint venture, the online procurement and sourcing system will start running beginning of November this year for everyone doing business with the company. The company indicated that the end-to-end automated system, known as SAP Ariba, will remove complexities and allow Debswana and its suppliers to manage all processes from contracts to payments, proposals, purchase orders and invoices in one platform.

According to Debswana the SAP Ariba network is a dynamic, digital marketplace with more than 3.3 million companies excess of 20 000 product and service categories in over 190 countries. Project Manager of the online procurement system, Tshepo Mokgethi, indicated that the platform will also make it easy for Debswana to accelerate sales cycle while lowering the cost of sales, finding new suppliers and buyers, ensuring timely and predictable payments, negotiating contracts, strengthening customer relationships and increasing customer retention.

“SAP Ariba will be the only gateway to do business with Debswana for both existing and prospective suppliers after the implementation in November 2018,” he said, adding that all companies, both new and existing will be required to register for free on SAP Ariba in mid-September 2018. Debswana this week hosted SAP Ariba Focused Group Discussions, which will be followed by series of Clinics and workshops during August and September 2018, where the new functionality and specifically the supplier self-registration process will be demonstrated to the Suppliers.

Botswana is the world’s largest diamond producer by value, producing about 21% of global output. Debswana is the largest producer of rough diamonds in the De Beers Group of Companies, as well as being Botswana’s largest taxpayer. Roughly 80% of the profits generated by Debswana is accrued as government revenue for the benefit of the people of Botswana.

​​​​​​​​Being the largest single company in Botswana Debswana is a key business for the entire economic value chain, apart from mining related sectors the company engages, Debswana is also a major source of business for other industries, ranging from logistics, construction, small medium enterprises, property amongst others. In 2014 the company spent in access of   5 billion pula on local procurement, with Botswana based companies accounting for BWP 4,037 million, while citizen owned companies enjoyed business amounting to over 694 million pula in just one year.

The company has also assessed and registered 134 new citizen-owned companies in its supply chain database eligible for participation in the multimillion Debswana procurement cake. Debswana states that In addition to the returns of  mining operations generated for its shareholders, the company contribute to local economic development through ,direct employment of local contractors ,Preferential procurement from local and citizen supplies.
 

To develop small medium enterprises in 2014, Debswana also introduced a program call Tokafala which is a partnership between the company, De Beers, Anglo American and the Botswana government. The Program aims at promoting economic development and stimulates employment creation by supporting small, medium and micro enterprises (SMMEs) both financially and access to markets. In addition to loans and seed funding, a key aim of Tokafala was to improve the access of SMMEs to markets and supply chains, and to create links to business opportunities with Debswana, De Beers global sales function in Gaborone and other partners.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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